Jul 16, 2018, 04.04 PM IST
Our order book follows a 3-4 month cycle and we pass on price changes to the customers based on changes in prices of steel and zinc in three to four months, ML Mittal, MD, Bharat Wire Ropes, tells ET Now.
At a time when copper and zinc prices have come down, how does that dynamics of the wire business change? Do you get inventory losses, do you pass price hikes to consumers or do you keep your long-term contracts unchanged?
The wire rope industry is not about commodity items like wire industries. Our order book position is normally a 3-4 month cycle and we pass on price changes to the customers based on changes in prices of steel and zinc in three to four months. Our major raw material is high carbon steel and zinc and recently there was almost 20% decrease in the zinc prices and steel prices also become soften almost by 10%. These benefits we are going to get in the near future and we are going to quote slightly lower price to the customers.
So far as inventory loss is concerned, we carry some inventory but the margin is much higher for absorbing this type of losses so far as raw material and zinc prices are concerned. We are very confident that the volatility in raw material and zinc prices would not affect our business as our value addition is much higher compared to other commodity items like wires or similar products.
In case the the RMC cost is higher, would it be fair to assume that you will be passing it onto the consumers?
When raw material cost price rises by 20-25%, definitely we negotiate with the customers at higher price points. Whenever we give fresh offer to the customers that is based on current prices. We deal with international markets and internationally steel prices are important as compared to domestic prices.
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